Forex expert advisors are automated computer programs, which support the activities of a trader. These programs work within various trading platforms as an extension or they can be bought via the Internet and implemented in the platform. It is necessary to understand their mechanism in order to use them properly. In this article, a simple automated trading strategy based on moving average will be explained.
Basically, the program opens or closes a position when the price graph crosses the moving average graph. When the level of a moving average is higher than the opening price and is lower than the closing price, then the position is opened. In other words, if the moving average graph is crossed by the price graph from the bottom, the robot buys the chosen currency. Inversely, if the moving average graph is crossed by the price graph from the top, the robot sells the chosen currency. It is a simple, yet effective strategy used in forex trading. The program buys when the exchange rates rise and sells when they fall. When the program decides to take any action, it calculates the size of the lot. There exist many algorithms that set the right lot size, but most of those that could be found on popular trading platforms take only risk under consideration. What is more, an investor can set for example a special decrease factor, which lowers the lot size of the opened position, if this currency pair caused losses in the past. Such robots make online forex trading much more accessible for anyone interested, but having only an average forex ea does not bring in high profits. In order to reach the top, an investor should use a best forex trading platform which gives access to most sophisticated expert advisors, highest liquidity and lowest spreads. Then and only then forex trading becomes a source of the profits, not losses.